The Clutha Leader. BALCLUTHA: TUESDAY, OCT. 24. THE BUTTER PROBLEM.

Clutha Leader, Volume XLIII, Issue 33, 24 October 1916, Page 5

The Clutha Leader. BALCLUTHA: TUESDAY, OCT. 24. THE BUTTER PROBLEM.

The New Zealand Board of Trade has made suggestions for restricting the price of butter to Is 7d a pound retail in the cities of the Dominion, and, according to a Wellington Press Association telegram, a conference of the licensing authority under the Order-in-Council of October Li and representatives of the butter trade adopted a working arrangement recently. The board had previously made an exhaustive examination of the causes of the present very high price of this necessity. As a result of its inquiries it. recognises that it will pay better to export butter than sell it at Is 7d a pound, and that if the price is arbitrarily fixed at that sum it will be necessary to take further action or the dairy factories will cease making butter altogether and manufacture cheese instead. If that is doue the only butter available in New Zealand would be that extracted from whey. In order that those manufacturing butter for the local market shall be placed on the same footing as those exporting the commodity the board proposes that a surcharge shall be placed, upon exported dairy produce, and that by this means the two classes of manufacturers shall be paid similar profits. The proposal is very ingenious, but we fear that in practice it will be found that it will not have the desired effect. Whenever attempts have been made to interfere with the law of supply .and demand Governments have generally found that they have more harm than good. New Zealand had an example of this two years ago when the Government interfered with the grain market. So far as wheat was concerned we question if the Government conferred any material benefit upon the people of the country by importing wheat-. It certainly sold it at less than cost price, but the taxpayer, had to foot the bill, and the public probably paid more under this indirect system than it would if ordinary methods had been obtained. Had the Government not interfered the merchants and millers, who are conversant with every move in the grain markets of the world, would have imported the wheat probably at less than it cost the Government, and certainly the competition between the firms would have kept the price at the lowest possible level consistent with solvent business. No

doubt the Board of Trade wishes to justify its existence, and has therefore made its recommendation regarding the butter problem, for ite member? are conversant with the results of previous Government interference. We shall be agreeably astonished if the board's proposals work out satisfactorily, and T?hilo enabling the local consumer to obtain « jie«Bßity at a lower price thai ruling on tke world 'a market, -they

at the same time do not oppress the producer, for after all the price the farmer obtains for his produce regulates his wages. The board has apparently forgotten this fact. During the past year we have had a general rise in the -wages account of the Dominion. In many callings this increase 'has been arbitrary, in that it has not been regulated by the price of labour on the world's market. The farmers' wages have also risen in a remarkable degree; but they have been governed by the price of what lie sells in the world's market. He is now called upon by the board's proposals to take less for patriotic reasons. But is it reasonable that he should be asked to do ■something that no one else in the community is expected to do 1 ? If the board had recommended that the State should pay the difference between the London value of butter and that ruling on the local market there would have been more reason iu its recommendation. A glance at what is occurring in England at present should make the board reconsider its recommendation. The price of butter is sojhigh at Home that the use of margarine has increased enormously. Butter was selling in London at 2s a pound in August, and margarine at Is. People were buying the cheaper article at an increasing rate. The London Economist of August 19 says that the British 'Board of Trade returns show that the "imports of margarine jumped in one year from £;M>00,000 to £5,700,000, while the amount of raw material imported for the making of margarine for home use increased from £2,607,000- to £5,546,000.'.' The consumption of butter, on the other hand, showed a marked downward tendency. The closing comments of the Economist on the situation are deserving of special at- . tention. "Viewing this development," it remarks, "from the national standpoint at the present time, what is the verdict? These 4,78.1,000cwt of margarine (imported and made in England in 1915) were worth at the places of production and the ports of arrival £12,987,000. Had they been of butter they would have been ' worth £!!;!,481,000, at the average price of butter imports in 1915. By its sensible use of margarine the nation may thus be said to have saved in one year more than £20,000,000 on its butter bill. Moreover, this large sum 'has been saved entirely at the expense of the overseas farmer (since it is from him that the butter would have to be procured), and may be said to be the working man's handsome contribution towards the reduction of imports, and the consequent correction of that adverse trade balance which has cost our Government so much thought. Nor should it be forgotten that there is plenty of scope for further well-doing in this direction. Our 1915 consumption of butter was :5,808,000c wt, worth at ports £26,700,000. Had its place been taken by margarine its value would have been only £10,600,000 —a further saving of over £16,000,000. This statement by such a high authority as the Economist should cause the New Zealand Government to consider the position very carefully before it places restriction upon the export of butter. New Zealand will require every shilling it can raise to pay its share of the cost of the war. Last year upwards of £6,000,000 worth of dairy produce was exported, and it is questionable if it is wise to interfere with such an important primary industry by enforcing a recommendation which will tend to restrict exportation. The Dominion su-qis up the position very convincingly, as follows: "The -main consideration at the moment should be to export as much as can possibly be spared of our dairy produce. Whether the Govern- | ment decides to tinker with prices on the lines suggested bv the Board of Trade, or on some other basis, or not at I all, it should at least endeavour to insure as large an export trade as possible. The Acting-Minister for Finance in his recent remarks on the financial position generally makes it clear that he is alive to the necessity for keeping a sharp eye on the commitments that the war is piling up for us. The less we interfere with the sources which we must look to uow and in the years ahead to enable us to meet those obligations, the better it will be for evervone."